Questions regarding buying a new investment/rental property

[Evan Redmond]

Hi Everyone,

I plan to buy a new property, primarily to rent it out eventually. I have ran into this problem with multi-families: 

1. Multi-families in my area are around 100 years old. From what I have read, the average lifespan of a building is about 100 years, and I don't want to have to do a lot of work in the near future on the property.

So then I thought to buy a condo(s) instead. I recently ran into these problem with condos: 

1. The condo board can put a cap on the amount of units that can be rented out, so I might not be able to rent it out if they decide I can't.

2. If there is no cap on the rented out units, then the value of the condo will possibly go way down because some loans don't allow these types of situations, decreasing demand. 

Other questions I have are: 

1. How do I know after I buy a condo they aren't going to just raise the fees to unreasonably high levels? Do they make profit from the fees? Is there any way to protect from this?

2. What happens when the condo is at the end of its "life" and needs to be totally re-built? Also for multi-family houses. 

3. Is there any other reasons why I wouldn't be allowed to rent out my new property other than zoning, health department issues, or the ones I previously mentioned?

Any help is greatly appreciated. 

Thank you, 

Evan

[Nathan Gesner]

@Evan Redmond do you know anyone that tears down a building when it turns 100 years old? If properly maintained, houses will last much longer than that. I've been looking at some amazing historic homes that are 100 - 150 years old and they are in better condition than some homes that were built 30 years ago.

Condos and townhomes in an HOA can certainly be problematic. Even if you are allowed to rent them the day you buy them, the HOA board could later change the rules and stop all rentals. They can also raise HOA fees (and they do) or they can hit you with a "special assessment" when they are short on funds and need to make a major repair like paving the parking lot or updating the clubhouse.

Zoning typically only restricts renting for fewer than 30 days (short-term or vacation rentals), but you still want to check and you'll definitely need to consider what the HOA allows.